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BRIAN HOOPS

By Staff | Jul 19, 2013

In the July 11 supply/demand report, the USDA projected that corn sup- plies as of Aug. 31 will total 1.959

billion bushels, while soybean stockpiles would increase to 295 mb.

Analysts had forecast a corn reading of 1.874 bb, but the USDA actually increased corn stocks from 1.949 bb last month. The soybean ending stocks were forecast to grow by 30 mb.

USDA’s 2013 corn production is fore- cast at 13.95 bb using a harvested acreage figure of 89.1 million and a yield of 156.5 bushels per acre.

The USDA did lower feed usage by 50 mb to 5.15 bb and exports by another 50 mb to 1.25 bb, putting total usage at 12.75 bb.

For the current marketing year, which ends this August, the department lowered its forecast for corn inventories to 729 mb from 769 mb in June.

The new forecast is nearly in line with analysts’ call of 722 mb.

The USDA slightly increased this year’s soybean production to 3.42 bb, a new record by using a harvested acreage figure of 76.9 million and a yield of 44.5 bpa.

Demand was left unchanged at 3.264 bb, but the increase in production resulted in the increase in ending stocks.

The USDA’s projection for soybean stocks at the end of this summer held steady at 125 mb, just above analysts’ average call.

For now, the trade will focus on these numbers and the crop condition ratings.

If crop ratings stay high, the USDA will have no choice but to continue to use these production figures, which will weigh on trade values.

However, producers continue to bemoan the state of this year’s corn and soybean crops. While there is some good-looking fields, there is a lot of the crop that is way behind maturity due to the late-planted spring and the excessive rains and cool temps that slowed maturity.

At some point this year, the USDA will be forced to recognize some of these crops will not reach full yield potential and adjust balance sheets accordingly.

Until then, prices look to drift lower.

CORN ANALYSIS

Corn closed the week $.18 higher. Last week, private exporters announced sales of 120,000 metric tons of U.S. corn to Mexi- co and 1.2 million metric tons of U.S. corn to China.

In the weekly export sales report, new crop corn sales were 32.1 mb, a much bet- ter weekly total. Next week should be strong as well with big sales to China.

Last week, the crop progress report said corn’s good-to-excellent ratings jumped 1 percent to 68 percent.

USDA’s projection of a 14.005 bb crop looks to push harvest lows to major weekly support of $4.71. Demand will look to im-

prove as we get closer to harvest as foreign buyers will try to time the harvest lows to gain forward cov- erage.

This corn crop has a long way to go to reach 14.005 bb as much of the crop nationwide is well behind schedule, meaning a lot of harm can come to

the crop yet this year. At some point, the risk to the downside will be

8 15

1035-1085 1125-1193

1064 1160

93.75-101.00 94.00-100.00

96.00

95.58

Source USDA-AMS

Iowa sheep/lamb market

Week ending: July 13

Receipts: 1038Last week: NRLast Year: 883

Slaughter Lambs-Shorn, Choice and Prime 2-3

HeadWt RangeAvg WtPrice RangeAvg Price 12124124117.00117.00

Slaughter Lambs-Shorn, Choice and Prime 2-4

HeadWt RangeAvg WtPrice RangeAvg Price 7147147115.50115.50

Slaughter Lambs-Wooled, Choice and Prime 2-3

HeadWt RangeAvg WtPrice RangeAvg Price

Brian Hoops

mArket ANAlyst

190 58

114-129

131-141

119 112.00-116.00

136 113.50-116.50

114.92 115.31

6488 20623 6660 5713 132770 15828 62867 14954

148.00 134.43 135.00 135.00 142.85 122.00 134.25 119.75

minimal. Strategy and outlook: Producers are now

100 percent sold of 2012/13 crop and are also 50 percent sold of the 2013/14 crop.

Producers own December corn puts on 50 percent of 2013 production. We will look to buy at-the-money calls if weather turns adverse.

SOYBEANS ANALYSIS

Soybeans closed the week $.29 higher from last week. Last week, private ex- porters said 120,000 mt of U.S. soybeans were sold to China; 135,000 mt of U.S. soybeans to an unknown destination and 120,000 mt of optional origin soybeans to an unknown destination.

In the weekly export sales report, new sales were decent at 18.6 mb. The weekly crop progress report said the U.S. soybean conditions held steady at 67 percent g-to-e, while expectations were for a 1 to 2 percent increase in that category.

Normal weather during the last half of July will push prices lower as a huge, record large crop will be realized. Seasonal highs are normally in by June 23 and unless weather turns adverse, highs are in place.

The soybean crop is way behind normal due to the late-planted nature of the season. It will need near perfect weather the rest of the summer to realize the yield potential that is forecasted by the USDA.

It can happen, but the downside does look limited to weekly chart support.

Strategy and outlook: Producers are 100 percent sold of the 2012/13 production and are 40 percent sold of 2013/14. Sell 10 percent at $13.45 against the January con- tract. Producers own November puts on 50 percent of 2013 production.

This material has been prepared by a sales or trading employee or agent of Midwest Market So- lutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Depart- ment.

The risk of loss in trading futures and/or op- tions is substantial and each investor and/or trad- er must consider whether this is a suitable in- vestment. Past performance, whether actual or indicated by simulated historical tests of strate- gies, is not indicative of future results. Trading ad- vice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is ac- curate or complete and it should not be relied up- on as such.

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